High-End Living in Miami With Fashion and Fast Cars

A slowing market in Florida tests the draw of Aston Martin, Porsche, Armani and luxury brands that license their names to real-estate developers, as research suggests ‘designer properties’ don’t command a premium

A rendering of the Porsche Design Tower, which features a car elevator that allows residents to drive right into their apartments.
ILLUSTRATION: PORSCHE DESIGN TOWER

A rendering of the Porsche Design Tower, which features a car elevator that allows residents to drive right into their apartments.

ILLUSTRATION: PORSCHE DESIGN TOWER

Argentinian real-estate developer Juan Pablo Verdiquio is a self-confessed "car guy." He owns a Porsche and several Ferrari and Audi sports cars. In 2015 he paid almost $4.2 million to buy a slightly different model of Porsche: a three-bedroom condo in Miami’s Porsche Design Tower.

Mr. Verdiquio’s decision had nothing to do with his need for speedsters. Rather, he said he thinks the Porsche brand could help ensure that his condominium maintains its value, even if the Miami market, known for its dramatic ups and downs, gets choppy.

"Buying into a brand that’s been around for 100 years? I’d take that bet any day. It’s like buying into Coca-Cola," said Mr. Verdiquio, 41.

In the Miami area alone, Porsche, Armani, Fendi and Missoni have loaned their names to luxury condo projects over the past few years. And currently under construction on Biscayne Boulevard Way is an Aston Martin-branded 66-story condo, where units are expected to start at roughly $700,000 and go up to around $50 million for the penthouse, according to an Aston Martin spokesman. Miami’s flattening luxury real-estate market will test the power of these luxury brands to persuade buyers—many of them international—to pay top dollar for a home.

In reality, luxury-branded residences command almost no price premium over comparable luxury condos in the Miami area however, according to research by listings website Zillow.com. In an analysis of the Miami market by Zillow, the company found that the price per square foot commanded by "designer properties" was indistinguishable from prices for other luxury condos, according to a spokeswoman.

At the same time, the inventory of newly built residences continues to rise, with 4,868 new condo units slated for delivery this year, the most since 2008, according to data from brokerage Fortune International Group. The Aston Martin tower specifically could face headwinds, said Peter Zalewski, a principal with the Miami real-estate consultancy Condo Vultures, because it’s just getting out of the ground as the market reaches peak supply. (Developers declined to discuss the percentage of units in luxury-branded buildings that have been sold.)

"They’re swimming out and the crest of the wave is coming right towards them," he said.

Some industry experts also caution that affiliating with a new condominium project in this climate could be risky for the reputation of luxury brands if the project doesn’t come to fruition, or if sales don’t live up to expectations.

Robert Thorne, who owns a wellness-oriented design firm, recently purchased a $1.4 million unit in the Armani/Casa building.
Alexia Fodere for The Wall Street Journal

"I tell them before we start that it can do more harm than good," said Gil Dezer of Dezer Development, whose firm has partnered with Porsche Design Group and Armani/Casa Interior Design Studio on new Miami towers and who employed the model in the early 2000s with President Donald Trump. "If you don’t get financing, if the units come out badly, there are so many things that can happen."

Major real-estate developers, such as the Related Group and HFZ Capital Group, have both paused on new projects in Miami over the past 18 months amid rumblings of oversupply, for example.

"The premise that the brand adds or helps maintain value becomes challenged when you have a lot of competition entering the market," said appraiser Jonathan Miller, who tracks Miami sales. "It becomes less black and white."

There are other advantages, however, said Robert Thorne, 57, the owner of a wellness-oriented design firm, who paid $1.4 million for a two-bedroom unit at the Armani/Casa project last year. "Outside of the fact that it brings value, it secures the fact that the building is not going to change much from the original proposal," he said. "Once the developer is sold out, the condo association can’t forgo the upkeep they committed to."

A master bedroom at the Armani/Casa building. Luxury companies make design choices with developers every step of the way.
Alexia Fodere for The Wall Street Journal

He said he believes the luxury brands put more pressure on developers to keep the building up to appropriate standards.

The luxury companies themselves have a lot to gain in these partnerships. The brands consult with the developers on design choices for the buildings’ common areas and lobbies, for example. In exchange, they pocket a fee that’s usually in the tens of millions, according to one developer. They can also pocket a small percentage of sales.

At the Aston Martin building, the car company masterminded a design that includes door handles wrapped in stitched leather, a carbon-fiber welcome desk in the lobby and an Aston Martin parked outside. The Porsche Design Tower famously features a car elevator that allows residents to drive right into their apartments. At the Missoni Baia building developed by OKO Group, the Miami-based development company founded by Russian billionaire Vladislav Doronin, the Italian brand’s iconic zigzig pattern pervades the furnishings in common areas.

Expanding a brand’s reach helps luxury-goods companies face the challenges of e-commerce and attracting younger shoppers. "These fashion companies have never been under more pressure to realize returns when their core business is besieged by all sorts of other issues," said Pauline Brown, the former North American chairman for LVMH Moët Hennessy Louis Vuitton, the luxury-goods company.

Simon Sproule, the chief marketing officer and chairman of the Americas for Aston Martin, declined to say how much the company received for its Miami project. But the returns have be high enough for it to explore other opportunities.

"We’re in discussions with a number of different projects around the world," he said. "It might look on paper like a stretch for us to be doing real estate but we have expertise in design and knowledge of the luxury market."

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